Home Loan Glossary
The product glossary immediately below explains all the column descriptions found in the "Loan Comparator".
Please scroll down for a full alphabetical glossary list.
Loan Comparator Column Headings
| Lender Name |
Name of the lending institution. |
| Product Name |
Lenders description of the loan |
| Comparison Rate |
Commonly known as the “True
Rate”. Used to ascertain the actual rate of a loan by factoring in upfront costs, ongoing fees (non government) over a loan period of 7 years with a loan value ratio (LVR) of 75%. |
| Lender Rate |
The advertised loan interest rate. |
| Total Up-front Fees |
Fees charged to compensate the lenders internal costs of organizing a loan approval. These include the loan application process and sometimes property valuation fees. |
| Ongoing Fees |
Generally a monthly or annual fee charged over the life of the loan. |
| Extra Payments Allowed |
Funds credited to the mortgage above the minimum principal & interest or interest only repayments. |
| Exit Fee |
Costs incurred by paying out a loan in full. |
| Mimimum Redraw |
The minimum amount which can be drawn out of the mortgage set by the lender. |
| Building Loan Allowed. |
Determines if the loan product accepts building loan applications. |
| 100% Offset |
A facility where excess funds either in the loan or in a separate savings account is applied to reduce the interest payable on the mortgage. Only full 100% offsets are listed in the loan table information. |
| Salary Credited To Mortgage |
The ability to have the lending institution accept income or part income deposited directly into the mortgage. The result is similar to a 100 % offset. |
Alphabetical Glossary Listing
A B C D E F G H I J L M N O P R S T
| A |
| AAPR(true rate) |
Commonly known as the “True Rate”. Used to ascertain the actual rate of a loan by factoring in upfront costs, ongoing fees (non government) over a loan period of 7 years with a loan value ratio (LVR) of 75%. |
| ABIO |
Australian Banking Industry Ombudsman (ABIO) a body customers can use for complaints against a lender and have them assessed independently. |
| Accrued interest |
Interest incurred or earned which has yet to be paid or charged . |
| Additional Repayments |
Funds credited to the mortgage above the minimum repayments. |
| Adjustments |
The allocation of expenses (utility costs e.g. phone, electricity, water rate) on settlement day that the seller has paid for but not used, and which the purchaser also has not used but will be charged for. |
| All In One Loan |
Usually a residential home loan that allows the borrower to deposit funds such as income, savings etc into the mortgage and have the ability to withdraw these funds for everyday expenses. As interest is calculated daily on loans any excess funds left in the loan account reduces the interest bill. |
| Amortisation Period |
The time a borrower is required to repay a loan at the agreed terms. |
| Application Fees |
Fees charged to compensate the lenders internal costs of organising a loan approval. |
| Annual Percentage Rate |
Advertised rate of interest per annum. (APR) |
| ATM |
Automatic Teller Machine |
| B |
| Basic Variable |
A home loan with generally a lower variable rate with reduced loan features. |
| Body Corporate |
Unit owners forming a corporation within a strata building and common areas. |
| C |
| Calculated |
The frequency interest is calculated. Usually on a daily basis. |
| Capitalising Interest |
When interest is added to the debt instead of being paid when as it is charged. |
| Capped Loan |
A loan where the interest rate does not exceed a pre determined level. The rate can decrease unlike a fixed rate. |
| Caveat |
Latin for “beware”. This often applies to a contract clause |
| Certificate Of Title |
The document details the ownership information and land size and whether there are any encumbrances. |
| Chattels |
Chattels generally refers to furniture (such as a serviced apartment fully furnished) and clothes. |
| Combination Loan |
Generally known as a split loan where the loan is apportioned between fixed and variable. |
| Common Property |
Usually found in apartments or units. Land which is owned by the tenants rather than individuals. |
| Comparison Rate |
Used to compare the actual rate of a loan taking into account total upfront fees, ongoing fees (non government) and usually over a seven year loan period. |
| Construction Loans |
A feature of a loan which funds the building of a new dwelling or commercial premise. |
| Consumer Credit Code |
Parliament Act (Nov. 1996) which governs the relationship between borrowers and lenders. |
| Contract |
A legally enforceable agreement between individuals or entities. |
| Conveyancing |
Legal process for the transfer of real estate ownership. |
| CRAA |
Credit Referencing Association of Australia. The association stores credit details on all consumers. |
| Credit Union |
A cooperative owned and controlled by the members who use its services. |
| D |
| Deposit Bond |
Guarantees that the purchaser will pay the full deposit by the due date. Institutions which provide deposit bonds act as a guarantor payment will be made. |
| E |
| Early Termination Charges |
Charged when a loan is paid off before the end of its term. |
| Easement |
A corridor or passage of land which is owned by another and where access is allowed. |
| Encumbrance |
An outstanding liability or charge on a property. |
| Equity Mortgage |
A loan secured by the part of the value of an asset usually a house. |
| Establishment Fee |
Fees charged for setting up a loan. |
| Exit Fee |
Costs incurred when paying out a loan in full. |
| F |
| FID |
Financial Institutions Duty. State government duty. |
| Freehold |
The dwelling and the land are owned by the owner. |
| G |
| Gazumping |
When an offer on a property has been accepted but a deposit is not yet paid and another higher offer is accepted by a separate party and secures the sale. |
| Giro Post |
Service where banking transactions can be conducted through the post. |
| Guarantor |
Where a party agrees to be responsible for the payment of another party’s debts. |
| H |
| Holding Deposit |
A deposit which is refundable on the goodwill of the party involved to go ahead with the purchase. |
| I |
| Interest Adjustment |
Usually involves a fixed loan. When additional repayments are made an interest adjustment cost is at times charged to compensate the lender for loss of interest revenue. |
| Interest Only Loan |
Payments are made to repay the minimum cost which is the interest and not the principal. |
| Internet Banking |
Where banking transactions such as payments, transfers and account balances are made via the internet. |
| J |
| Joint Tenants |
Equal share of ownership between two or more persons. |
| L |
| Land Transfer Fee |
State government tax on the selling price of a property. Each state tax fee is different but it is generally $60.00. |
| Line of Credit |
A loan based on the equity of a person’s property generally representing a ceiling of 80% of the property value. |
| Loan Maintenance Fee |
Usually referred as an ongoing fee and is generally charged over the life of the loan. |
| Loan to Value Ratio (LVR) |
The ratio of the amount lent to the valuation of the property. Eg. $50,000 loan against the value of a $100,000 property the LVR = 50%. |
| M |
| Mortgage |
Security for a loan generally taken over real estate. |
| Mortgagee |
The lender who provides the funds. |
| Mortgage Discharge |
The administration expense of closing a loan. |
| Mortgage Insurance |
Insurance taken out by the lender to protect them from a borrower defaulting. Generally if a person is borrowing greater than 80% of the property value, the lender makes the borrower pay for the lenders cover. |
| Mortgage Offset |
A savings account linked to a home loan. There are generally two types of Offsets. 100% Offset and Partial Offset. The 100% Offset is the better option.
This concept also applies to mortgages where income can be directly credited into the loan. |
| Mortgage Protection Insurance |
Different to Mortgage Insurance, this is where the borrower can protect oneself from failing to make loan repayments. |
| Mortgage Stamp Duty |
State government tax calculated on the borrowers loan amount. |
| N |
| Negative Gearing |
The investment return (rental for example) does not meet the minimum loan repayments. |
| O |
| Off the Plan |
The purchase of a property before being fully constructed. |
| Offset Account |
A bank account linked to a home loan. There are generally two types of Offsets. 100% Offset and Partial Offset. The 100% Offset is the better option. |
| Ombudsman |
Australian Banking Industry Ombudsman (ABIO) A body which provides lending customers an avenue to make formal complaints which can be assessed independently. |
| Ongoing Fee |
Generally a monthly or annual fee charged over the life of the loan. |
| P |
| Passed In |
An auction termed referring to when a property does not meet a reserve price set by the vendor. |
| Portability |
Generally occurs when a person transfers their existing loan to another property. Additional fees may apply if the loan size is increased. |
| Principal |
The sum borrowed on which interest is then repaid. |
| Principal and Interest |
Where both principal and interest is repaid over the life of the loan. |
| R |
| Redraw Facility |
Where a borrower can redraw the additional repayments made over the minimum payment. Minimum redraw amounts may apply with some lenders. |
| Rental Guarantee |
A guarantor from the vendor/developer giving the purchaser a set return. Generally given for investment properties. |
| Rise and Fall Clause |
Building contract clause that allows the final pricing to move up or down according to the changes of material prices or wages. |
| S |
| Search |
Usually a conveyancer or solicitor examining to that a vendor is in a position to sell a property and that there are no encumbrances on it. |
| Semi Detached |
Two properties that share a common wall. |
| Settlement Date |
Finalising of payment and taking possession. |
| Solicitors Mortgages |
Usually interest only loans offered by solicitor. |
| Split Loan |
Usually one loan formed in two parts. Generally the loan is split between fixed and variable. |
| Strata Title |
This title provides a person with ownership of a unit in a unit complex which can be sold, leased or transferred. |
| Stratum Title |
This title offers the purchaser a shareholding in the company that manages the common area. Lenders can be reluctant to lend greater than 80% of the property value. |
| T |
| Tenants in Common |
Equal or uneven share ownership of a property by two or more persons. The property is divided according to law if one party dies. |
| Term |
The time frame of a home loan or fixed loan period. |
| Title Fees |
State government tax for the title search transfer of property ownership, registering a new mortgage or discharging of an existing one. |
| Title Search |
Ensures the vendor has the right to sell and transfer ownership. Usually conducted by a conveyancer or solicitor. |
| Torrens Title |
Known as Certificate of Title. Records ownership of a property. |
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